Who imposes sanctions
- United Nations: the Security Council adopts sanctions, and the EU and the UK implement all of them.
- EU: the Council adopts restrictive measures by unanimity, and enforcement is primarily for the Member States.
- UK: ministers make sanctions regulations under the Sanctions and Anti-Money Laundering Act 2018, and the Office of Financial Sanctions Implementation (OFSI), part of HM Treasury, implements the financial ones.
- US: the Treasury's Office of Foreign Assets Control (OFAC) administers and enforces them.
Who has to comply with sanctions
Sanctions bind everyone within a jurisdiction, not only regulated firms. EU sanctions apply to EU nationals in any location, to companies incorporated under the law of a Member State, and to any person or entity within the EU.
UK financial sanctions apply to anyone carrying out activities within the UK, to entities established under UK law wherever they operate, and to UK citizens anywhere in the world.
How sanctions screening works in a product
A payment or crypto business screens customers, beneficial owners and payment counterparties against the lists, at onboarding and again whenever a list changes. Names are transliterated and shared, so matching is fuzzy and most alerts are false: a person has to clear them.
Ownership counts too. OFSI notes that an asset freeze also applies to entities owned or controlled by a designated person, and OFAC blocks entities owned 50 percent or more by blocked persons.
A true match is not simply declined. The funds are frozen, and OFAC, for example, requires blocked property to be reported within 10 business days.
Sanctions, AML or PEP checks?
- Anti-money laundering
- Looks for the proceeds of crime, and works by assessing risk. Sanctions prohibit dealing with listed parties whatever the origin of the money.
- Politically exposed person
- A risk category: the customer may be served, with more scrutiny. A sanctioned person may not be dealt with.
- Embargo
- A ban on trade with a country or in a class of goods, such as arms. An asset freeze targets named persons and entities.
Where Sanctions shows up in a platform
Modules that do the work
- KYC / AMLIdentity checks, screening and ongoing monitoring, with the verification provider you choose.
- Compliance reportingTransaction monitoring, the Travel Rule and regulatory reports, ready for your regulator.
- Fraud & riskReal-time fraud scoring, limits and case management, with the risk engines you already trust.
- PayoutsMoney out to bank accounts, cards and wallets, on the rail that fits each payment.
Platforms that need it
Where it is written
The laws and standards this page's facts come from.
- Council of the EU, How the EU adopts and reviews sanctions
- OFSI, About us (GOV.UK)
- Sanctions and Anti-Money Laundering Act 2018 (legislation.gov.uk)
- OFAC, Frequently asked questions: basic information on OFAC and sanctions (US Treasury)
General information, not legal advice: what applies to you depends on your services and your market.